15 to reflect the end of the COBRA subsidy period on Sept. 30, 2021. The subsidy termination notices must include the following information: A statement that the COBRA subsidy will end soon and “prominent identification” of the date that it will end.
What happens when Cobra expires?
- Answer: You’re fortunate that you have COBRA if at all possible keep it until it expires. When your COBRA health insurance coverage expires you will qualify for guaranteed issue health insurance coverage under the federal HIPAA law. Most health insurance companies who market individual health insurance offer HIPAA qualified coverage.
Did the Cobra subsidy end?
With the COBRA subsidy period set to expire on September 30, 2021, plan administrators are required to notify AEIs of the subsidy’s expiration.
Was the Cobra subsidy extended?
The COBRA subsidy has been extended until September 30, 2021. Currently this is the final date for subsidy assistance.
Will the Cobra subsidy be extended past September 2021?
COBRA Subsidy Under the American Rescue Plan of 2021 ends September 30, 2021. The American Rescue Plan Act of 2021, the most recent stimulus and COVID-19 relief package, requires employers to extend offers of free COBRA coverage to certain qualified employees from April 1 through September 30, 2021.
What is the Cobra subsidy 2021?
The American Rescue Plan Act of 2021 (ARPA) provides for a 100% COBRA premium subsidy for up to six months, from April 1, 2021 through September 30, 2021, for Assistance Eligible Individuals (AEIs) as defined under the guidance.
Are COBRA benefits extended due to Covid?
Soon after the COVID-19 pandemic shut down the nation, the federal government extended the deadlines for electing COBRA and paying COBRA premiums for continuation of health insurance coverage. The first COBRA premium is due 45 days after the initial election is made.
What is COBRA continuation coverage?
The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances such as voluntary or involuntary job loss,
Is COBRA free in 2021?
COBRA is a continuation of the same health insurance policy that you had through your job. Free premiums began April 1, 2021, and end September 30, 2021. Benefits end earlier if your maximum period of COBRA coverage (usually 18 months) ends or if you become eligible for Medicare or another group health plan.
What happens after the COBRA subsidy ends?
You can continue on COBRA unsubsidized until your 18 months of COBRA eligibility ends. In addition, you will have the option to enroll in marketplace coverage when the subsidy ends in September. Loss of the COBRA subsidy will make you eligible for a special enrollment period (SEP) to sign up for marketplace coverage.
Will ARPA be extended past September 2021?
While the ARPA does not require employers to provide paid leave for employee absences related to COVID-19, it does extend the tax credit allowed for voluntarily extending FFCRA-like leave from April 1, 2021, through September 30, 2021.
How long can you COBRA benefits?
Q11: How long does COBRA coverage last? COBRA requires that continuation coverage extend from the date of the qualifying event for a limited period of 18 or 36 months.
Do employers have to pay COBRA?
Employers may require individuals to pay for COBRA continuation coverage. Premiums cannot exceed the full cost of coverage, plus a 2 percent administration charge.
What is COBRA premium subsidy?
The state law is called Cal-COBRA (sometimes also called “supplemental COBRA”). The law is sometimes referred to as ARPA. ARPA provides premium assistance equal to 100% of the amount of the premium for eligible individuals to continue their employer-provided health care coverage after a job loss or reduction in hours.
Will Biden extend COBRA insurance?
Included in Biden’s $1.9 trillion rescue plan are provisions that expand the pool of recipients eligible for receiving COBRA. Specifically, individuals that declined COBRA coverage, or previously elected to receive COBRA coverage but discontinued it, effectively gain another opportunity to receive COBRA coverage.
How do I get reimbursed for COBRA payments?
The premium will be reimbursed directly to the employer, plan administrator, or insurance company through a COBRA premium assistance credit. 1. Plans and issuers were required to notify eligible employees who had a qualifying event before April 1, 2021 about their right to COBRA premium assistance by May 31.
Reminder: Deadline Approaches for COBRA Subsidy Final Notice
The COBRA subsidy period, which was established by the American Rescue Plan Act (ARPA), is coming to an end. If an assistance eligible individual (AEI), who is a COBRA qualified beneficiary, becomes eligible for COBRA as a result of reduced working hours or an unplanned termination of employment, the AEI may be eligible for a COBRA subsidy equal to the entire COBRA premium for the period from April 1 through September 30, 2020. Employers and plan administrators are required to provide subsidy termination notices to AEIs prior to the expiration of their COBRA subsidy.
It is necessary to send these warnings between August 16 and September 15 in order to reflect the end of the COBRA subsidy term on September 30, 2021, which is the case for many individuals.
- In accordance with the American Rescue Plan Act (ARPA), the COBRA subsidy period is drawing to a conclusion. If an assistance eligible individual (AEI), who is a COBRA qualified beneficiary, becomes eligible for COBRA as a result of reduced working hours or an unplanned termination of employment, he or she may be eligible for a COBRA subsidy equal to the entire COBRA premium for the period from April 1 through September 30, 2020 under the ARPA. Companies and plan administrators are expected to provide subsidy termination letters to AEIs at least 45 days before the date on which the individual’s COBRA subsidy will expire. The notices must be sent to AEIs no later than 15 days before the date on which the individual’s COBRA subsidy will expire. It is necessary to send these letters between August 16 and September 15 in order to reflect the conclusion of the COBRA subsidy term on September 30, 2021, which is the case for the majority of persons. The following information must be included in the subsidy termination notices:
- Statement indicating that the individual may be eligible for coverage without the need for a COBRA subsidy via COBRA or another group health plan
If a COBRA subsidy is ended as a result of qualifying for another group health plan or Medicare, the notification is not needed to be given. Notice Regarding the Model There is a model subsidy termination notice available from the Department of Labor (DOL). However, while it is not compulsory to utilize the model notice, the Department of Labor regards its use as evidence of good faith compliance with the notification obligations under ARPA. Conclusion Group health plan sponsors should continue to collaborate closely with their third-party COBRA administrators to ensure compliance with ARPA as well as Department of Labor and Internal Revenue Service instructions on COBRA subsidy eligibility and eligibility requirements.
- 15 deadline) sending the subsidy termination notice to AEIs who will lose the subsidy on Sept.
- At this time, however, we have not heard any reports of a further extension of the deadline.
- Tripp VanderWali is an attorney with the law firm of Miller Johnson & Associates in Grand Rapids, Michigan, and a member of the company’s employee benefits and executive compensation division as well as the firm’s health care reform group.
- Liefbroer is an attorney at the firm whose practice is mostly focused on health and welfare plans, as well as wellness programs and programs for the elderly.
- Attend the SHRM Annual ConferenceExpo 2021, which will be held September 9-12 in Las Vegas and online.]
IRS Issues New COBRA Subsidy Guidance as Deadlines Approach
Follow-up information for businesses on the federal government’s 100-percent premium subsidy for qualifying COBRA health care subscribers, which was passed earlier this year as part of the American Rescue Plan Act, was recently released by the Internal Revenue Service (IRS) (ARPA). In order to get the subsidy, assistance eligible people (AEIs) must enroll in COBRA coverage between April 1 and September 30. The sign-up period for the COBRA subsidy, which began after AEIs got a subsidy letter and concluded 60 days later, has come to a close for many of the company’s employees.
Important Dates and Deadlines According to instructions published by the United States Department of Labor in April, most AEIs should have received an updated COBRA notification by May 31 advising them of the subsidy.
Jobseekers who were laid off after April 1 would still be eligible for the subsidy up to and including September 30, and the standard COBRA notification requirements would apply:
- Employers subject to COBRA regulations are expected to notify their group health plan administrator within 30 days after an employee’s termination of employment or reduction in employment hours.
- The plan administrator is expected to advise the person of his or her COBRA rights within 14 days of receiving the notification. It is the employer’s responsibility to provide COBRA notices directly if he or she is also the plan administrator. In this case, the employer has the complete 44-day period in which to submit a COBRA election notice.
The plan administrator is obligated to advise the person of his or her COBRA rights within 14 days of receiving such notification. The employer has the full 44-day time in which to issue a COBRA election notification if the company is also the plan administrator and provides COBRA notices directly to employees.
It’s Not Over ‘Til It’s Over: The COBRA Premium Subsidy is Ending
September 1, 2021 is a Wednesday in the year 2021. In our article from May 23, 2021, we mentioned that certain assistance eligible individuals can receive a 100 percent premium subsidy for continuation coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA) between April 1 and September 30, 2021, if they qualify under the American Rescue Plan Act of 2021 (ARPA) (AEIs). In order to fulfill their responsibilities, employers and plan administrators must provide notice to AEIs when their subsidies are set to expire.
When does the COBRA premium subsidy end?
The subsidies for AEIs will expire on the earlier of the following dates: (1) September 30, 2021; (2) the date on which the AEIs reach the end of their maximum COBRA continuation coverage period; or (3) the date on which the AEIs become eligible for Medicare or another group health plan, whichever is later. (It’s important to remember that AEIs are expected to tell plan administrators if they become eligible for such coverage, and failing to do so may result in a tax penalty).
Who is to receive the COBRA subsidy expiration notice?
AEIs who will lose their subsidy as a result of (1) the end of the COBRA subsidy period (which ends on September 30, 2021), (2) the end of the individual’s COBRA continuation coverage period, or (3) the first period of coverage beginning on or after the date the individual becomes eligible under another group health plan, including Medicare, must receive the new notice from plan administrators. Plan administrators will likely need to issue a substantial number of expiry letters to AEIs with subsidies that will expire on or before September 30, 2021, even though the subsidy will stop sooner than September 30, 2021 for certain persons.
When are plan administrators required to provide this expiration notice?
Before losing the subsidy, plan administrators must notify AEIs at least 15 days (but no more than 45 days) in advance. That implies, in the vast majority of situations, notifications must be sent by September 15, 2021.
What must the expiration notice include?
A prominently displayed notification must explain in “clear and intelligible language” when the AEI’s subsidy is about to expire and must include the expiration date. It must also identify additional coverage choices for which a special enrollment period may be available, such as group coverage through a Health Insurance Marketplace or Medicare, if one is available. In accordance with the model notice provided by the United States Department of Labor (DOL), required information includes (1) the factors an AEI should consider when selecting among coverage options, (2) how and when to enroll in medical benefits, (3) the difficulty of changing to other coverage options at a later date, and (4) how much time remains in the COBRA coverage period, as well as (5) the full, unsubsidized premium amount due if the AEI chooses to keep his or her COBRA coverage in effect.
- All rights reserved by Ogletree, Deakins, Nash, SmoakStewart, P.C.
- Volume XI, Number 244 of the National Law Review.
- Smithey focuses her practice on all facets of employee benefits law, including retirement plans and health insurance.
- The Internal Revenue Code, as well as other federal and state regulations that apply to employee benefit programs and plan sponsors are all topics that Ms.
Smithey advises her clients on. Ms. Smithey’s clients include companies, government agencies, and individuals. She aids customers with the Internal Revenue Service and the Department of Labor.
COBRA Subsidy: Don’t Forget – 2nd Notice Deadline is Looming
In order to serve as a reminder to employers, the COBRA premium assistance given under the American Rescue Plan Act of 2021 (ARPA) will come to an end on September 30, 2021 for all assistance eligible people (AEIs). Employers are required to fund 100 percent of the cost of sustaining group health coverage through COBRA from April 1, 2021 through September 30, 2021 for AEIs, as outlined in our April 2021 notice (i.e., individuals who lose coverage due to a reduction in hours or an involuntary termination of employment).
- Employers were obligated to notify AEIs of their eligibility for this subsidy by May 31, 2021, if they did not do so already.
- Employers are required to inform AEIs 15-45 days in advance of the day on which their COBRA subsidy is slated to expire under the ARPA.
- There will be a second notification needed to be sent to all AEIs who are enrolled in COBRA and have periods of coverage that extend beyond September 30, 2021, advising them of the termination of the subsidy.
- The mailing must be sent out between August 16, 2021 and September 15, 2021, with a deadline of August 16, 2021.
This is the End: Employers Must Provide Notice of the Expiring COBRA Subsidy Period
The COBRA subsidy provided by the COVID-19 stimulus package – the American Rescue Plan Act of 2021 (ARPA) – is reaching the end of its term, and companies are required to send warnings by September 15 in many cases. The COBRA subsidy reimbursed 100 percent of COBRA premiums for assistance-eligible persons for periods of coverage beginning on or after April 1, 2021 and ending on or before September 30, 2021 for periods of coverage beginning on or after April 1, 2021. We have discussed the specifics of the subsidies in the following posts: These Boots Are Designed to Be Walked in.
- You can rely on me.
- Due to the fact that eligible persons have 60 days to elect COBRA, there are still a few of months of coverage periods for which consumers may be able to opt the subsidy if they qualify.
- The last subsidy period will be September, assuming an employer offers coverage during a calendar month in which the coverage is provided.
- Additionally, if the employee becomes eligible for alternative group health coverage or if the COBRA term ends, the subsidy period may come to an end sooner.
- As a result, the notification date for subsidy periods ending September 30, 2021 is September 15, 2021, rather than September 30, 2020.
- If the COBRA term would otherwise continue, the conclusion of the subsidy period does not always imply the end of the COBRA period as well.
Under normal plan payment conditions that would need payment from the covered individual, COBRA coverage will automatically continue for periods beginning after September 30, 2021. (through the regular COBRA period).
COBRA Subsidy Remaining Action Item for Employers
On September 29, 2021, a post was made. InCOVID-19,InCOBRA 9 minutes are required for reading. The COBRAsubsidy has been one of the most visible components of the American Rescue Plan Act of 2021 (ARPA), as well as one of the most significant in terms of impact on businesses. Having said that, the qualifying term for assistance-eligible persons will expire on September 30, 2021, unless an extension is granted. Many plan sponsors are still working on one more action item. Continue reading to learn how you can maintain compliance.
What is the COBRA Subsidy?
In March 2021, the passage of ARPA resulted in the federal government subsidizing the whole cost of COBRA coverage through the end of September 2021. The majority of those who were working had a portion of their insurance premiums paid for by their employer. Employees who had been let off or whose hours had been reduced, as many millions of Americans did during the epidemic, were given the opportunity to keep their health insurance under the COBRA program. This would result in the health insurance premium being fully covered by COBRA.
In many cases, temporary insurance is more difficult to obtain, especially when one is seeking for job.
As a result, COBRA has evolved into a necessary subsidy that is intended to provide critical help to workers who are experiencing financial difficulties or who are looking for job.
COBRA Subsidy 2021 Eligibility
In the event that an employee voluntarily terminated their health insurance benefits after November 1, 2019, they were eligible for discounted COBRA coverage until September 30, 2021. There were three types of persons who were to be deemed eligible for consideration:
- If an employee who was eligible for COBRA coverage after November 1, 2019, waived their COBRA coverage immediately or before to the expiration of their eligibility term, which is normally 18 months, they will be deemed eligible. Anyone who is currently insured by COBRA is included in this category. Employees who would be eligible for COBRA benefits before September 30, 2021
- In the future
Employees who were previously qualified for the subsidy will lose their eligibility if they do any of the following:
- In order to be eligible for health insurance under a new plan, you must: Reach the date on which their COBRA coverage would normally terminate, for example, if their 18-month period expires in July
The fact that the subsidy was solely intended to cover the cost of health insurance premiums should be made clear to both employers and employees. According to an article in Forbes, the plan did not cover copays, deductibles, or co-insurance payments. According to The National Law Review, the Act “provides assistance qualifying persons with free COBRA coverage for the duration of the subsidy period,” and the subsidy itself is not taxable for those who qualify.
Involuntary Termination Clarifications for COBRA Subsidy
In May of 2021, the Internal Revenue Service (IRS) released a notification referred to as Notice 2021-3 in order to address ambiguities surrounding employee eligibility. If employees did not exhaust their maximum COBRA coverage prior to April 1, 2021, then employers were obligated to offer any COBRA subsidies to any qualified employees who may have been involuntarily terminated or who may have experienced any type of decrease in hours prior to April 1, 2021.
Employees also utilized those frequently asked questions to figure out what the word “involuntary termination” meant. According to the legal firm Seyfarth Shaw LLP, they were the following:
- Termination on one’s own initiative for a legitimate cause It was found that “in this case, the termination was attributable to an action by the employer that resulted in a major negative change in the employment relationship, akin to a constructive discharge.” termination when the employee is out from work due to illness or disability, but only if it is anticipated that the employee will return to work following the illness or disability
- Assuming that the employee elected to retire rather than be dismissed (and that the employee was informed of the impending involuntary termination)
- Resignation as a result of a significant shift in the geographic location of the employer
- If an employee was ready and able to renew his or her work contract, the employment contract was not renewed
For further information on those clarifications, please refer to questions 24 through 34 in the Notice (which may be found at the URL mentioned above).
Additional COBRA Subsidy Clarifications
In order to obtain further information about such clarifications, please refer to questions 24 through 34 in the Notice(link provided above).
- Second-Chance Elections: Individuals were entitled to qualify for the subsidies more than once provided they met more than one qualifying event within a certain time period. Calculations for the Medicare Tax Credit: Consult Notice 2021-31, Questions 63 through 81, to understand how to calculate and claim the refundable payroll tax credit. The need for employees to self-certify (or attest) that they were qualified for COBRA coverage through the subsidy was an option that employers might choose to implement. For more information, go to Question 4 in the Notice.
How Does the COBRA Subsidy Work?
According to attorneys from Polsinelli PC who wrote in The National Law Review, if a current or former employee qualified for COBRA coverage for which the subsidy paid, the employer would be required to reimburse the subsidy payment to the current or former employee within 60 days of the subsidy payment being made. If employers had followed the notification requirements, they would have been eligible for reimbursement from the federal government. The refund came in the form of a payroll tax credit, which they were able to claim by completing Form 941 with the IRS for their quarterly taxes.
- In most cases, an employee becomes eligible for COBRA as a result of being terminated or having their hours reduced
- The following is how the employer notifies all eligible employees about the COBRA subsidy: Employees were required to do this within 60 days of a qualifying occurrence occurring on or after April 1, 2021, starting on or after April 1, 2021
- The employee chooses COBRA benefits, which are as follows: This was to take place within 63 days of being eligible for the program. The Carrier is compensated by the Employer: There was enough money left over to meet the expense of the healthcare premium. Employers are reimbursed by the government in the following ways: This refund was received in the form of a payroll tax credit, but only after the organization filed Form 941 with the IRS with respect to its quarterly taxes.
2021 COBRA Subsidy Employee Notice Requirement
Employers were required to comply with employee notification rules regarding the subsidies in order to qualify for the employer credit. The notices largely contained the standard COBRA information as well as any unique restrictions set forth in the ARPA. They then have to be given to qualified potential participants within 60 days of their qualifying event taking place. It was necessary for plan sponsors to notify assistance eligible persons no fewer than 15 days and no more than 45 days before the subsidy expired.
The following were among the notices:
- Any paperwork that may be required in order to prove eligibility for premium assistance
- All information necessary to contact the plan administrator, such as name, address, and phone number, as well as the names and phone numbers of individuals who may be able to provide pertinent information about the premium subsidies
- The extraordinary 60-day election term will be described in detail. The qualified beneficiaries’ responsibility to notify the plan administrator whenever the qualified beneficiary becomes eligible for disqualifying coverage is described in detail. Description, displayed prominently, of an eligible beneficiary’s right to a subsidized premium as well as any limitations imposed on the qualified beneficiary’s right to receive the discounted premium Description of the qualifying beneficiary’s choice to enroll in an alternative kind of coverage, if such option is granted by the employer.
These example notifications, which were made available by the Department of Labor (DOL), were utilized effectively to present the many alternatives to employees. Employers may choose to collaborate with third-party COBRA administrators in the event that they get COBRA subsidy alerts. They assisted in ensuring that employee notices adhered to all applicable norms and duties, as well as updating any material that needed to be updated. The COBRA subsidy notice of expiration was supposed to be sent out 45 to 15 days before the subsidy expired.
This was a criteria that had to be met.
Who Can Help Employers with the COBRA Subsidy?
It would have been beneficial for employers who administered COBRA on their own, or with the aid of a third-party administrator, to keep an eye out for changes in the Department of Labor’s rules and regulations. In this scenario, it would be beneficial to obtain advice from a registered benefits broker as well as from an attorney. Alpine is BerniePortal’s exclusive COBRA third-party administrator (TPA). Alpine’s staff has engaged closely with all of its employer and broker clients to ensure that all past, current, and prospective COBRA members who are eligible for the subsidy are made aware of their options and how to take maximum use of the subsidy, according to Alpine.
You may learn more about COBRA changes by viewing the Alpine webinar presentation, which is available below. Keep in mind that the coverage term for this subsidy began on April 1, 2021, and will conclude on September 30, 2021, so keep that in mind while planning for the future.
Will The COBRA Subsidy be Extended?
From September 30, 2020 to September 30, 2021, the COBRA subsidy will be available. At the moment, this is the last day to apply for subsidized help. There has been no news on whether or not the deadline would be extended beyond this point. The Department of Labor (DOL) has also provided further explanations regarding the COBRA subsidies through the publication of a frequently asked questions (FAQs) section. To understand more about the specific laws and regulations that may apply to your team, please read the ten-page booklet linked below.
COBRA Health Insurance Continuation Premium Subsidy
21st of January, 2015 update: For premiums paid on behalf of workers who were involuntarily dismissed from their jobs between September 1, 2008 and May 31, 2010, an employer might claim a credit for the premiums paid on their behalf. After May 31, 2010, persons who were involuntarily dismissed from their employment are no longer eligible for the COBRA premium assistance credit. As a result, the credit will only be accessible in exceptional circumstances, such as those where COBRA eligibility was delayed as a result of the employer’s provision of health care coverage upon termination.
The duration of this subsidy has been extended till May 31, 2010.
Take a look at these resources:
- IR-2009-15, The Internal Revenue Service Provides Information to Assist Employers in Claiming the COBRA Medical Coverage Credit on the Payroll Tax Form
- Discussion of how to handle the COBRA continuation premium subsidies to departed workers
- Questions and answers The Notice 2009-27PDF, entitled “Premium Assistance for COBRA Benefits,” is available for download.
Employers should make use of the most recent version of:
- In order to disclose their COBRA premium aid payments, they must file Form 941-X, Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund. Detailed instructions on how to complete lines 19a and 19b of Form 941-X, which pertain to COBRA premium assistance payments
Small businesses that fileForm 944, Employer’s ANNUAL Federal Tax Return — often those with an anticipated employment tax due of $1,000 or less in the calendar year — are eligible to claim their COBRA benefit onForm 944-X, which is a supplemental form to Form 944. Agribusinesses can also claim the COBRA credit on Form 943-X, Adjusted Employer’s Annual Federal Tax Return for Agricultural Employees or Claim for Refund, which is available through the Internal Revenue Service.
Employees and Former Employees
In accordance with the Recovery Act, qualifying individuals who lost their employment between September 1, 2008, and May 31, 2010, are entitled to a subsidy of up to 65 percent on COBRA continuation premiums for themselves and their families for a maximum of 15 months.
- Workers who are eligible pay a portion of the premium to their former employers (35 percent)
- You must have been involuntarily terminated from your work between September 1, 2008, and May 31, 2010 in order to be eligible. If you file a single return and your modified adjusted gross income exceeds $125,000 ($250,000 if you file a combined return), the amount of this subsidy is decreased by one-third. In the event that your modified adjusted gross income exceeds $145,000 ($290,000 for joint filers), you will not be eligible to receive the subsidy.
If Your Hours Were Reduced
People who become eligible for COBRA coverage as a consequence of a decrease in hours that occurs between September 1, 2008, and May 31, 2010, followed by an involuntary termination that occurs between March 2, 2010, and May 31, 2010, are also eligible for the COBRA subsidy. If you fall into this group, your subsidy will be accessible to you beginning with the first period of coverage after the involuntary termination of your insurance coverage. Individuals who did not enroll in COBRA coverage following the decrease in hours, or who did enroll but later canceled their coverage, will be given another opportunity to enroll in COBRA coverage.
The administrator of a group health plan or other body is required to provide notification of the new election as soon as possible following the involuntary termination of the group health plan.
Just like in the case of other assistance-eligible persons, the subsidy expires after 15 months, the expiration of COBRA coverage, or the individual’s eligibility for other group health or Medicare coverage, whichever occurs first.
Questions and Answers
Interested in learning more? See our question and answer page for more information. Items that are related:
- Forms and publications
- The American Recovery and Reinvestment Act of 2009: Information Center
- Forms and publications
Preparing for the End of ARPA COBRA Subsidies
The date is June 21, 2021. The American Rescue Plan Act of 2021 (ARPA) has gotten considerable attention to date, but employers and plan administrators must now shift their attention to drafting the appropriate notification to certain Assistance Eligible Individuals (AEI) of the expiry of any subsidies they have received. A timely notice must be sent by plan administrators to AEIs who seek to continue their COBRA continuation coverage after the subsidy has expired in order to comply with regulatory requirements.
Individuals who voluntarily discontinue COBRA coverage, enroll in other group health plan coverage or Medicare, or whose maximum COBRA coverage period ends before September 30, 2021, are not obliged to receive an Expiration Notice from their plan administrator.
The IRS indicated in the Notice that the subsidy will expire on the earliest date of the following options:
- On the 21st of June in the year 2021 While much of the attention has been focused on the implementation of the American Rescue Plan Act of 2021 (ARPA), employers and plan administrators must now turn their attention to preparing the necessary notice to some Assistance Eligible Individuals (AEIs) regarding the expiration of any subsidies they have received in the meantime. A timely notice must be sent by plan administrators to AEIs who seek to continue their COBRA continuation coverage after the subsidy has expired in order to comply with federal regulations. In order to be eligible to maintain COBRA coverage beyond the coverage term ending September 30, 2021, the AEI must deliver the subsidized Expiration Notice to all of its employees. Individuals who voluntarily abandon COBRA coverage, enroll in other group health plan coverage or Medicare, or whose maximum COBRA coverage period expires before September 30, 2021, are not obliged to receive an Expiration Notice from their plan administrators. The Departments of Labor and the Treasury gave advise on the expiration of COBRA subsidies in IRS Notice 2021-31, which was published on May 18 and reiterated critical facts. The IRS noted in the Notice that the subsidy will terminate on the earliest of the following dates:
When is the Expiration Notice due?
In order to avoid losing the subsidy, plan administrators must inform AEIs at least 15 days (but no more than 45 days) in advance. This will occur between August 17, 2021, and September 30, 2021, for the vast majority of employers. When COBRA coverage does not begin on the first of the month, however, the employer must calculate the period applicable to the Expiration Notice by calculating when the last period of coverage that began on or before September 30, 2021 will terminate and the Expiration Notice will be effective.
Can the subsidy last beyond September 30, 2021?
In Notice 2021-31, the Internal Revenue Service highlighted that, for persons who are still qualified for the premium subsidy on September 30, the reimbursement will not necessarily expire on that day. Instead, the subsidy is extended until the conclusion of the last “period of coverage,” which must begin on or before September 30 and expire no later than September 30. A “period of coverage” refers to a month or a shorter length of time when it comes to the premiums that would otherwise be payable.
When is an individual eligible for the premium subsidy?Does a second qualifying event affect eligibility for the premium subsidy?
In Notice 2021-31, the Internal Revenue Service clarified that, for persons who are still qualified for the premium subsidy on September 30, the reimbursement will not necessarily expire on that date as previously stated. Instead, the subsidy is extended until the end of the last “period of coverage,” which must begin on or before September 30 and expire on or before October 31. According to the definition, a “period of coverage” refers to a period of one month or a shorter time in terms of the premiums that would otherwise be charged.
Example: If premiums are typically evaluated on a bi-weekly period basis, and the time from September 26 to October 16 falls within that period, the subsidy would not be prorated to September 30th, but would instead cover the whole period ending on October 16.
What is considered disqualifying coverage?
When an AEI becomes eligible (even if they are not enrolled) for disqualifying coverage, the COBRA premium assistance comes to a cease. Medicare and group health plan coverage are excluded from the definition of disqualifying coverage, as are exempted benefits, a qualified small employer health reimbursement arrangement (QSEHRA), and a healthcare flexible spending account (FSA). The premium subsidy will continue to be available to an individual who meets the eligibility requirements for disqualifying coverage but who is subject to a waiting period before such coverage becomes effective.
What does the Expiration Notice need to include?
A prominently displayed expiration date must be included in the notification in order to explain in “clear and intelligible language” when the AEI’s subsidy will expire, according to the notice requirements. Plans should include information on other coverage options for which a special enrollment period may be available (such as Medicare or group coverage through the Health Insurance Marketplace), as well information on the factors that AEI should consider when deciding between coverage options, in accordance with the Department of Labor’s model Expiration Notice.
As a sponsor of an insured health plan with a conversion option, administrators are obliged under COBRA to inform qualifying beneficiaries of their opportunity to enroll in a conversion policy within 180 days after the plan’s termination date.
How does this affect employers with multiple plans?
When determining whether or not a person is qualified for the subsidy, employers who provide coverage to current workers and retirees may be faced with a difficult set of decisions. Legal counsel can assist individuals in determining if their retiree coverage may be considered non-qualifying coverage for the purpose of subsidy eligibility. Due to the fact that the general COBRA subsidy period will end on September 30, plan administrators should begin making preparations now to ensure compliance with the subsidy Expiration Notice rules, while also keeping track of other current COBRA notice requirements, such as those relating to health insurance coverage.
COBRA Premium Subsidies – A Little More Guidance (and a Reminder)
Following up on its prior guidance on the premium subsidy requirements of the Consolidated Omnibus Budget Reconciliation Act (COBRA) set forth in the American Rescue Plan Act, the IRS has published a new notice that addresses a few problems that were not completely addressed in the former notice (ARPA). ARPA generally requires that the cost of COBRA coverage be fully subsidized for those who qualify for COBRA coverage due to a reduction in hours or an involuntary termination of employment between April 1, 2021, and September 30, 2021, if they qualify for COBRA coverage due to a reduction in hours or an involuntary termination of employment.
Pension plan sponsors may be able to recoup the amount of the subsidy they received via the use of payroll tax credits. The updated notice provides clarification on a number of specific facts, such as the following:
- In the case of an individual who is permitted to extend COBRA coverage due to a disability or a second qualifying event (or mini-COBRA coverage due to a period of extension under applicable state rules), the COBRA subsidy is available even if that individual did not notify the plan of their right to an extension prior to the expiration of the usual 18-month maximum COBRA period. Once an employer becomes aware of the extension, it is required to provide subsidized coverage (where applicable, retroactively to April 1). Many businesses looked back just 18 months to see who had qualified for COBRA because of a decrease in hours or an involuntary termination of employment when providing notice of the subsidy and the opportunity to a second COBRA election when providing notice of the subsidy. The new guideline does not address whether businesses now have a legal need to reach out to individuals who may be eligible for the subsidy because they may have suffered a disability or a second event that would have resulted in the extension of their COBRA benefits. Whether or not to submit such a notification will be determined by the Department of Labor, which has regulatory jurisdiction over COBRA notice responsibilities
- However, it is not apparent whether or not any advice will be provided on this topic.
- In the case of an individual who is permitted to extend COBRA coverage due to a disability or a second qualifying event (or mini-COBRA coverage due to a period of extension under applicable state rules), the COBRA subsidy is available even if that individual did not notify the plan of their right to an extension prior to the expiration of the normal 18-month maximum COBRA period. The employer must provide subsidized coverage as soon as it becomes aware of the extension (where applicable, retroactively to April 1). The fact that many businesses only looked back 18 months to determine who had qualified for COBRA because of reduced working hours or an unplanned layoff was a significant factor in many businesses’ decision to provide notice of the subsidy and the entitlement to a second COBRA election. The new guideline does not address whether businesses now have a legal need to seek out to individuals who may be eligible for the subsidy because they may have suffered a handicap or a second event that would have resulted in their COBRA rights being extended. Whether or not to submit such a notice will be determined by the Department of Labor, which has regulatory responsibility over COBRA notification responsibilities
- However, it is not apparent whether or not any guidelines will be released on the subject.
- The appropriate common law employer, with the exception of multiemployer plans, is normally the company that may claim the payroll tax credit for COBRA coverage subsidies (in cases where COBRA is granted under federal law rather than a state mini-COBRA statute). In some cases, such as when a professional employer organization pays (or pays) the wages of an employee who has had their hours reduced or their employment terminated without their consent, or when a single state agency provides health coverage to (and collects COBRA premiums directly from) the employees and former employees of various state agencies, there are limited exceptions to this rule.
A final COBRA subsidy notice duty must also be met by health plan administrators, which should be kept in mind at all times. They must give written notification to persons who are qualified for the COBRA subsidy between August 16, 2021, and September 30, 2021, informing them that the subsidy will expire on September 30, if they are still receiving it. Plan administrators should begin planning for the preparation and distribution of this notification as soon as possible. Visit theHealth Care Reform Dashboardblog for the latest news and information on health care and health benefits development and implementation.
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The American Rescue Plan Act’s COBRA Subsidy Soon Expires & Employers are Required to Notify Impacted Individuals
A final COBRA subsidy notice duty must also be met by health plan administrators, so keep this in mind while planning your next event. They must issue written notification to persons who are eligible for the COBRA subsidy between August 16, 2021, and September 30, 2021, informing them that the subsidy will expire on September 30, 2021. Prepare for the preparation and distribution of this notification now, according to plan administrators. Keep up with the latest developments in health care and health benefits by visiting theHealth Care Reform Dashboardweblog.
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- The paperwork that must be completed in order to determine eligibility for premium help
- The contact information for the plan administrator or other person who is in charge of keeping track of pertinent information in connection with premium assistance
- And A description of the extended election time (if any) that is available to the individual. If an individual becomes eligible for coverage under another group health plan (other than excepted benefits, Qualified Small Employer Health Reimbursement Arrangements, or a health Flexible Spending Account), or becomes eligible for Medicare, the plan must be notified, and the plan must pay a penalty if the individual does not comply
- Explanation of the right to receive premium assistance and the requirements for eligibility
- And, if given by the employer, a description of the opportunity to enroll in a different coverage option that is available under the plan
To ensure that an employer’s plan administrator complies with the ARP’s COBRA subsidy expiry notice requirements, the Department of Labor has produced a model notice. The model notice may be viewed at the following link:. It is recommended that employers work closely with their plan administrator to verify that they are in compliance with this notice obligation. The purpose of this Special Bulletin is to provide information to the clients of Liebert Cassidy Whitmore LLP. It is not recommended that you act on the information contained in this Special Bulletin without seeking professional guidance.
Never Fear: More COBRA Subsidy Guidance Is Here
On July 26, 2021, the Internal Revenue Service (“IRS”) of the United States issued Notice 2021-46, which provided additional guidance on the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) and the premium assistance and tax credit provisions of the American Rescue Plan Act of 2021 (“ARPA”), as well as other tax-related issues. Specifically, as detailed in ourLegal Update, ARPA mandates employers to reimburse 100 percent of the cost of sustaining group health coverage under COBRA for aid eligible people from April 1, 2021 through September 30, 2021.
This subsidy was clarified by the IRS in IRS Notice 2021-31, which was published on May 18, 2021, as we previously discussed in our blog article.
Notice 2021-46 adds to and clarifies that guideline.
How Does the Subsidy Apply to Assistance Eligible Individuals Who Are Entitled To Extended Coverage Periods?
Individuals who qualify for assistance may be eligible for the COBRA subsidy for extended coverage periods (e.g., disability extensions, second qualifying events, or an extension under State mini-COBRA laws), according to Notice 2021-46. This is true even if the assistance eligible individual does not elect extended coverage prior to April 1, 2021. According to the Notice, an individual who is involuntarily dismissed and elects COBRA continuation coverage starting October 1, 2019 is provided as an illustration.
However, on March 1, 2020, the Social Security Administration issued a disability determination letter stating that the individual was handicapped as of November 1, 2019, which was received by the individual.
However, pursuant to the EBSA Disaster Relief Notices 2020-01 and 2021-01, the individual has one year and sixty days from the date of issue of the disability determination letter to notify the plan of the disability in order to be eligible for COBRA continuation coverage to be extended.
Given that the individual does not have other disqualifying group health plan coverage or Medicare, the individual is considered an aid qualified individual and is therefore entitled to the COBRA premium help.
Does Eligibility For Other Health Coverage That Does Not Include Vision or Dental Benefits Terminate an Assistance Eligible Individual’s Eligibility For the COBRA Subsidy for Vision-Only or Dental-Only Coverage?
Yes. The Assistance Eligible Individual’s eligibility for COBRA premium assistance terminates when he or she becomes eligible for coverage under any other disqualifying group health plan or Medicare, regardless of whether or not the other coverage includes all of the benefits provided by the COBRA coverage.
Which Entity May Claim the Tax Credit For the COBRA Subsidy?
Employees of two or more employers are covered by a group health plan (other than a multiemployer plan) subject to COBRA. In such cases, each common-law employer is treated as the premium payer eligible to claim the premium assistance tax credit with respect to its own current and former employees, even if such common-law employers are members of a controlled group. In addition, the Notice emphasizes that an entity that provides health benefits to workers of another company but is not a third-party payment of their salaries will not be recognized as a third-party payer for the purposes of applying Notice 2021-31 to those employees.
Reminder: Tell Participants that the Subsidy Period is Ending
Employees of two or more employers are covered by a group health plan (other than a multiemployer plan) subject to COBRA. In such cases, each common-law employer is treated as the premium payer eligible to claim the premium assistance tax credit with respect to its own current and former employees, even if the common-law employers are members of the same controlled group. In addition, the Notice emphasizes that an entity that provides health benefits to workers of another company but is not a third-party payment of their salaries shall not be recognized as a third-party payer for the purposes of applying Notice 2021-31 to the situation.
There are some snags in free COBRA health insurance for unemployed. Here’s what you need to know
With millions of people affected by the Covid epidemic who are living without health insurance, Linda, a lawyer from California who was let off from her job in January, is a model of solidarity. Because of a clause in the recent stimulus package, she realized that the federal government will fully reimburse her COBRA health insurance costs from April to September, something she had not previously known about. She phoned her insurance company right away to enroll. Having contracted a nasty urinary tract infection earlier this month, Linda (who asked that her full name not be used) was eager to see a doctor.
- The requirements of the $1.9 trillion disaster relief measure approved in March appeared to be rather straightforward: Beginning on April 1, the government will cover the cost of people’s COBRA premiums for a period of six months.
- Although many newly unemployed individuals cannot afford to do so, this provision in the stimulus package aims to change that by removing people’s monthly insurance costs totally for the first six months of their jobless benefit period.
- The vast majority of the recent $1,400 payments went to Social Security pensioners.
- After emailing her former insurer in April to inquire whether she was free to visit the doctor for treatment of her infection, Linda was astonished to learn that the government subsidy had not yet been made accessible.
- “Until we receive notification to the contrary, we must do business as normal.” “It’s annoying, to say the least,” said Linda, who is concerned that she may have to go to the emergency room for her illness, incurring more expenses and accruing debt.
- Activists in the health-care field are concerned that a large number of individuals may be experiencing similar difficulties while attempting to receive the temporary COBRA subsidy, which the U.S.
- Getting the new system up and operating will need collaboration between a variety of government organizations, businesses, and insurance firms.
As Sabrina Corlette, co-director of the Center on Health Insurance Reforms at Georgetown University’s McCourt School of Public Policy, put it: “It’s accessible for such a limited amount of time, and you don’t even learn about it until May 31?” It’s possible that many individuals will lose out on this chance.
A request for comment from the Department of Labor did not receive a response. While the new subsidy is being implemented, here’s what we know so far.
What if my insurer says it can’t offer the subsidy yet?
The good news is that even if you are unable to sign up for COBRA for a few weeks or months as a result of operational delays, if you qualify for the COBRA subsidy, all qualified claims incurred after April 1 (and before the end of September) should be covered, according to industry experts. However, you should anticipate to put in some effort to have this resolved. Caitlin Donovan, a spokesman for the Patient Advocate Foundation, a non-profit organization that assists people in obtaining and paying for health care, advised individuals to keep all of their medical documents throughout this time period.
Taking this step will make it easier for you to submit any claims or bill requests to your insurance provider once you have received the subsidy, as well as to get reimbursed for any expenditures you have incurred that are covered by your policy.
Who qualifies for the subsidy?
In Donovan’s opinion, you’ll be qualified if you were forced to leave a job that provided health insurance and you do not qualify for another employer’s plan or for Medicare coverage. “You would even be eligible if you had previously declined COBRA,” Donovan explained. You would also get complete coverage for any family members who are included in your plan. When your hours are reduced to the extent that you no longer qualify for your employer’s health insurance plan, you may be eligible for the six-month subsidy even if you still have a job.
If you haven’t heard back from your prior insurance, you should contact them.
How does the subsidy change my costs?
In the event that you lose your job, the government will cover all of your COBRA premiums. The possibility exists that you will be responsible for any copays or deductibles.
How long will the subsidy last?
The subsidies will be in effect until September 30, 2021. As a general rule, you can’t be on COBRA for more than 18 months at a time, therefore some people may be dropped from coverage earlier than that timeframe, depending on when they first became eligible for coverage.
What if I already turned down COBRA coverage?
Don’t be concerned. Take advantage of this opportunity while it is still available to you. Employees who are laid off are normally required to enroll in COBRA within 60 days of their job ending. In the meanwhile, even if you rejected down coverage in August 2020 because the rates were too expensive, you may now join again, according to the Georgetown University Health Policy Institute, providing you did so before the deadline. Always remember that once you receive notification of your eligibility for COBRA, you must enroll within 60 days of receiving the notification.
Will I have to pay for months I wasn’t insured through COBRA?
Ordinarily, if you do not sign up for coverage immediately and subsequently decide to do so, you will be required to pay back premiums since you are not permitted to have a gap in coverage. This policy has been temporarily altered by the relief bill.
You would not be required to pay premiums back to the day you were eligible to enroll in COBRA, based on the advice of Georgetown University’s health-care specialists. You will, however, only be protected for claims filed after April 1, 2019.
When does coverage through COBRA make sense?
The most significant disadvantage of COBRA is typically the high expense for laid-off employees, which may run into the hundreds of dollars per month. That stumbling block has been removed, at least until the end of September. One of the most significant benefits of COBRA is that you may maintain your current doctors and health-care providers if you so want. The cost of sustaining your employment insurance may be even more reasonable than other options if you’ve already reached your deductible for the year, according to insurance professionals.
Medicaid may make sense if you expect your financial difficulties to last for a lengthy period of time and if you do not want to be burdened with monthly premiums.
For example, if you received any unemployment compensation throughout the course of the year, you may be eligible for a free silver plan.
A marketplace plan may thus be more advantageous for you, according to Edwin Park, a research professor at Georgetown University’s McCourt School of Public Policy and an expert on health insurance.
If I sign up for COBRA, what will my options be at the end of September?
Unfortunately, there isn’t a satisfactory response to this question at this time. Other than in limited instances, the government has not stated whether it will allow those who take advantage of the COBRA subsidy a special registration period at the end of September, unless the situation changes. (Special enrollment periods allow customers to sign up for health insurance plans on the health insurance exchange outside of the typical enrollment period. Elected representatives have written to Secretary Xavier Becerra of the United States Department of Health and Human Services this month, requesting that he establish a special registration period after the subsidy ends.
Are you having difficulties obtaining the new COBRA subsidy?